Budgeting can be hard to get started so I thought it would be a good idea to write a blog on how to make a SMARTER budget. In order for a budget to be Smarter it needs to be Specific, Measurable, Attainable, Relevant, Timely , Evaluate, Reevaluate. Through using this criteria to draw up a budget you will increase your chances of making one that you will stick too.
The budget needs to be specific in the types of costs that you have not only for bills like Electricity, Phone costs or insurances but you also need to include things like Rent and Car related expenses.
Progress needs to be measurable as you budget so come back to it every week or whatever your budgeting cycle is and see your progress. Measuring progress will help you stay on track.
Be realistic can you really decide that you can live off only $30 per week for entertainment? Is that going to be enough or will you cave in and spend in a few weeks. Budgets need to be Attainable otherwise they are only temporary solutions.
Look at what items are relevant to budget for. Its going to be impossible to budget for every single little item that you purchase within a timeframe. The way I budget for these items is to have a “contingency” this means a having the weekly living expenses e.g food, entertainment ect… bundled into one item on the on the budget as these expenses can vary greatly week to week. It is best to keep most of your costs separate so they are measurable and only combine them when its relevant.
- Timely (Budgeting Cycle)
Budgets need to be covered over a timeframe. I call this a budgeting cycle and it can be daily, weekly, monthly, yearly or what ever works for you. My budget covers weekly, monthly and yearly. The reason behind this is most expenses happen weekly but many of them only occur monthly or yearly.
Without a doubt the most important part. Once you have put the budget together you can measure all the relevant expenses and decide where your money could be better spent or saved.
Budgeting doesn’t happen just once in your life. Everyone’s financial circumstances are continually changing. Through regular re-evaluation of you budget you will be able to budget for changes and reprioritise how to spend your limited funds.